In Mammon Among Friends, Malcolm C. Harris, Sr. provides commentary and news about the national economy, the Wichita economy, the world of finance, and postal economics. Experiences such as forecasting postal volumes and revenues, being involved in utility regulation, and teaching corporate finance have shaped his analysis.

Monday, April 30, 2007

According to the Kansas Star via Kansas.com"The government will retry former Westar Energy executives David Wittig and Douglas Lake on charges of defrauding the company."

According to the Kansas City Business Journal, the two former executives had been convicted on 39 and 30 counts of defrauding the utility. An appeals court threw out the convictions due to insufficient evidence on one of the isues in the case. Although prosecutors will not be able to pursue all of the original convictions, "Wittig will face 14 counts of circumventing internal controls and one count of conspiracy, [a federal spokeperson] said Monday. Lake will face 13 circumvention counts and one count of conspiracy ."

Tuesday, April 24, 2007

New orders for durable goods were up 3.4 percent compared with a 2.2 percent consensus estimate according to Bloomberg and 2.7 percent polled by the Wall Street Journal. Particularly relevant to Wichita, new orders for commercial aircraft were up by 37.6 percent more than offsetting a 48.8 percent decline in military arircraft orders. In a significant reverse of form, motor vehicles and parts were up 3.3 percent. Boeing announced 27 percent higher profits based on its revenues which are being driven by its strong order book.

Will the delating housing bubble pull us down?The national housing market remains a worry for the economic outlook. Yesterday we learned existing home sales were down by 8.4 percent in March, the largest drop in eighteen years. Weather has caused these numbers to bounce like a yo-yo. Indeed they spiked in February setting up a snap back. Thomas Lawler, the Vienna, Virginia housing economist, predicted a 7 percent drop in house prices this year (fourth quarter, 2007 over fourth quarter, 2006.) Lawler's prediction was quoted in today's Wall Street Journal. More encouraging was a 1.6 percent drop in the inventory of unsold homes and higher than expected new home sales in March of 1.213 million.

Thursday, April 05, 2007

FedEx has always tried to avoid unions. Management, from Fred Smith on down, sees unions as a barrier to the flexibility and entrepreneurial drive that it views as essential to FedEx's culture and profitability. Doubtlessly, there is a sprinkle of ideology as well.

Not surprisingly, the Teamsters see things differently. If you click on the title link for this posting, you will find their press release proclaiming a victory of sorts in their skirmishing with FedEx.

A key element in FedEx's business model for their package delivery operation and in particular for FedEx Home Delivery is its use of nonunion contractors.

Wednesday, April 04, 2007

The Bureau of Labor Statistics reported this morning that Wichita's job market was stronger than the national job market. Our unemployment rate dropped to 4.4 percent in February compared to 4.6 percent in January and 4.9 percent in the America as a whole.

Strong job growth

Employment, as measured by the Bureau's survey of Wichita's payrolls, grew 3.9 percent over February last year an increase of thirty nine hundred jobs. Strong orders in the aerospace industry have fueled this growth. Recent new orders data confirm that this sector is booming even while other key parts of manufacturing weaken. The news in the automotive industry, for example, continues to be weak.

Aerospace leads the way

Aerospace seems to be on the boom part of traditional boom and bust cycle. Although the domestic economic growth appears to be cooling off, foreign demand continues strong and a strong replacement demand exists in the U.S. as it battered airlines nurture their balance sheets back into health. Moreover, a new IMF study argues that the rest of the world is less vulnerable to a U.S. economic slowdown.

The Department of Commerce reported that the unfilled order backlog for the aerospace indutry was up 31.3 percent in February. The growth was almost entirely in the non defense book was up almost 40 percent.